Murphy USA earnings soar

$85.9M reported for 1Q is $63M increase over 2015

Graphs showing information about Murphy USA Inc's first quarter.
Graphs showing information about Murphy USA Inc's first quarter.

Murphy USA Inc. said Monday that its 2016 first quarter earnings more than tripled compared to the first quarter of 2015. The report propelled the company's stock up by almost 12 percent.

Murphy USA posted a profit of $85.9 million for the quarter, up from $22.9 million during the same period in 2015.

The El Dorado-based company said its earnings were helped by a $56 million after-tax gain on the sale of a pipeline system on the Gulf Coast.

"First quarter results demonstrate tangible progress on our 2016 initiatives as we executed our formula for value creation," Andrew Clyde, president and chief executive officer of Murphy USA, said in a statement.

Murphy USA posted earnings per share of $2.08 for the period ending March 31, up from 50 cents during the same quarter last year.

Murphy USA's shares rose $6.94, or 11.9 percent, to close Monday at $65.30 on the New York Stock Exchange. Analysts expected the company to report average earnings per share of 52 cents for the quarter.

Murphy USA's shares traded in the third-highest volume this year, said Bob Williams, senior vice president and managing director of Simmons First Investment Group Inc. in Little Rock.

The company released its earnings Monday before markets opened.

Murphy USA said it bought back almost 2.4 million shares for $150 million during the first quarter under its $500 million stock repurchase program.

The company reported revenue of $2.49 billion for the first quarter, compared with $2.92 billion a year ago.

Murphy USA said in February that it would sell its CAM pipeline system for about $85 million to an undisclosed buyer.

The company has said that the funds from the deal, which closed March 31, can be used to help it grow independently from Wal-Mart Stores Inc.

Murphy USA said earlier this year that it will not contract with Wal-Mart on future gas station projects.

Murphy USA is a retail fuel and convenience store firm. The company separated from Murphy Oil Corp. and became its own public company in 2013.

Murphy Oil, one of many energy companies struggling with low oil prices, reported a loss last week of almost $200 million for the first quarter of 2016.

Murphy Oil also laid off 20 percent of its workforce during the first quarter in an effort to reduce costs amid the global oil slump.

While the weak oil prices have hurt oil producers, they have also resulted in some of the cheapest gasoline prices in years.

The average price for gasoline in Arkansas on Monday was $1.99 a gallon, down from $2.41 a year ago. The national average price for gasoline was $2.21 a gallon, down from $2.66 in 2015, according to AAA's Fuel Gauge.

Lower gasoline prices helped Murphy USA's earnings, Williams said, because consumers are more willing to spend money and travel when prices are lower.

Murphy USA said it saw retail fuel volumes grow 4.6 percent to 1.007 billion gallons in the quarter.

"They seem to be doing well," Williams said. "It seemed to me that really where they are doing particularly well is the result of the new contract with their merchandise."

Murphy USA said the transfer of its merchandise supplier to Core-Mark helped increase the company's merchandise margins.

The company said total merchandise sales increased 7.2 percent during the first quarter as a result of new stores. Non-tobacco sales rose 9.9 percent for the quarter, driven by strong lottery, beverage and beer sales.

"The successful transition of our merchandise supply chain contract to Core-Mark in February, provided a material boost to merchandise margins," Clyde said in the statement.

"Per store operating expenses improved almost 2 percent, even with relatively flat labor costs as we prepared for the store labor initiative rollout," he said.

Murphy USA opened one gas station in the first quarter and now operates 1,336 fuel stations nationwide.

Business on 05/10/2016

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